Tuesday, June 6, 2006

I have recently finished working my way through this years' Edge question - "What is Your Dangerous Idea?". I have mentioned Edge on here before; the annual question is asked of all their contributors (who consist of many leading figures of science & technology, plus a few miscellaneous others). Near the end of the list, in addition to there being a few bizarre (to say the least - thinking rocks, anyone?) entries, there is also this one from Michael Shermer, the editor of the very good Skeptic magazine:
Where goods cross frontiers, armies won't. Restated: where economic borders are porous between two nations, political borders become impervious to armies.
Data from the new sciences of evolutionary economics, behavioral economics, and neuroeconomics reveals that when people are free to cooperate and trade (such as in game theory protocols) they establish trust that is reinforced through neural pathways that release such bonding hormones as oxytocin. Thus, modern biology reveals that where people are free to cooperate and trade they are less likely to fight and kill those with whom they are cooperating and trading.
My dangerous idea is a solution to what I call the “really hard problem”: how best should we live? My answer: A free society, defined as free-market economics and democratic politics — fiscal conservatism and social liberalism — which leads to the greatest liberty for the greatest number. Since humans are, by nature, tribal, the overall goal is to expand the concept of the tribe to include all members of the species into a global free society. Free trade between all peoples is the surest way to reach this goal.
People have a hard time accepting free market economics for the same reason they have a hard time accepting evolution: it is counterintuitive. Life looks intelligently designed, so our natural inclination is to infer that there must be an intelligent designer — a God. Similarly, the economy looks designed, so our natural inclination is to infer that we need a designer — a Government. In fact, emergence and complexity theory explains how the principles of self-organization and emergence cause complex systems to arise from simple systems without a top-down designer.
Charles Darwin's natural selection is Adam Smith's invisible hand. Darwin showed how complex design and ecological balance were unintended consequences of individual competition among organisms. Smith showed how national wealth and social harmony were unintended consequences of individual competition among people. Nature's economy mirrors society's economy. Thus, integrating evolution and economics — what I call evonomics — reveals that an old economic doctrine is supported by modern biology.
Now, I am not arguing with his main point which states that trade between nations is good and leads to a buildup of trust, thereby reducing the likelihood of conflict. Neither am I challenging him when he says: "the principles of self-organization and emergence cause complex systems to arise from simple systems without a top-down designer." Agreed. I am arguing with him when he says that fiscal conservatism (taken to mean no governmental involvement in the economy) produces the greatest freedom for the greatest number; what it actually produces (as far as it has even been approached in the real world) is a small number of extremely wealthy individuals who then control the government for their own ends - a plutocracy.
Darwin showed how complex design and ecological balance were unintended consequences of individual competition among organisms.
Erm... no, he didn't. He did show how complex 'design' was an unintended consequence of individual competition and cooperation among organisms. There is no 'ecological balance', though. There are no rules, laws or legal enforcers in nature; capitalism and 'free markets', on the other hand, could not exist without rules, laws and powerful bodies to enforce them. Oh dear - we've already got a little bit of government before we've even started, haven't we?
Smith showed how national wealth and social harmony were unintended consequences of individual competition among people.
Erm... no, he didn't. This is hugely misleading; it leaves out the bulk of Smith's argument. It was never his intention to fetishize the 'Market'. I suggest Shermer re-reads (or perhaps more accurately, 'reads') the Wealth of Nations before coming out with such asinine assertions in future.. a little more scepticism towards conventional wisdom please, Mr. Skeptic! Whether it is a misunderstanding or (more likely) simply an unfamiliarity with what Smith actually wrote, certain economist's later views have been tacked on to the Wealth of Nations, quite unfairly, and words have been put into Smith's mouth which he himself never uttered.
Leaving Adam Smith to one side, many things cannot be achieved by private companies alone, in fields such as medicine, computing, telecommunications & the internet, public utilities: anything that is not profitable in the short-term (or ever) is beyond a private company's purview. Additionally, once a company receives it's Articles of Incorportation, the shareholders are relieved of many responsibilities, which become socialized with the whole population. Furthermore, supposedly fiscally conservative governments (such as the Reagan administration) tend to engage in even more public spending than their more liberal counterparts - they just tend to focus spending on the military-industrial sector rather that on social programs. Could this spending be what keeps the economy ticking over..? In any case, such spending is there, so actually existing fiscal conservatism is not what Shermer is talking about and he cannot legitimately use it as an example of the kind of thing he has in mind.
But what I really wanted to take issue with is this: 'Charles Darwin's natural selection is Adam Smith's invisible hand'. Adam Smith's invisible hand was what made the baker act in the interests of everyone (including himself) despite behaving in a selfish manner; under natural selection - by contrast - he would murder most of his rivals and collude with the rest to form a baking cartel. Human society today is emphatically not analogous to natural selection; as pointed out above, we have laws. We need laws. 'The Market' needs laws.
Actually, for very different reasons than Shermer would imagine, I find his analogy quite apt, inasmuch as natural selection is a particularly cruel, unfair and highly inefficient process; such things as mass extinctions, disease, predation, suffering and starvation in addition to genetic disorders and outright bad design and non-optimal vestigial phenotypic features are the tools of natural selection's trade, as Darwin himself readily acknowledged. This is why we've always tried to mitigate the worst aspects of evolution - with technological innovations such as vaccinations & antibiotics; surgery; painkillers; clean water supplies; sanitary sewage disposal; psychotherapy; factory farming and modern agricultural practices; and now biotechnologies such as genetic engineering, to mention a few of the countless examples.
Maybe what Shermer has in mind when he equates free markets with natural selection is simply allowing unfettered accumulation of wealth, handed down from generation to generation, until some individual or very small group owned almost everything - the failures would starve (or be killed or enslaved). There would only be private, mercenary armies and police, and only the very wealthy could afford them. We can see that this parallels natural selection, which, far from producing 'ecological balance', has produced one disproportionately successful species which is currently in the process of unbalancing ecological systems for what it sees as its' own short-term interests.
Shermer's idea is dangerous, but not (as he thinks) because it is an unintuitive truth. On the contrary, it is dangerous precisely because it's so wrongheaded and yet so pervasive. I could speculate on why this idea is so appealing to so many, perhaps because, as with the idea of God, it is a simple idea which erroneously gives the illusion of explaining everything; once everything has been explained, no more thinking is required. But the world is far more messy and random than both these sets of true believers like to think. The useful tool of the market indeed becomes a dangerous idea when it aquires the status of an unchallengable dogmatic ideology - true laissez-faire may theoretically maximize efficiency from businesses' perspective. Unfortunately, all those pesky people with their lives, families and personal interests keep getting in the way.
Just as we try to get the effects of natural selection under control, the market should also work for us - not the other way around.